Immigrants: Too Much of a Burden?

Takeaways

One frequently heard criticism of comprehensive immigration reform is that it will prove too costly to taxpayers. One recent study from the Heritage Foundation, for example, claims that each “low-skilled household” (one headed by a high-school dropout) costs federal taxpayers $22,000 a year.

Spread out over 50 years of expected work, the lifetime cost of such a family balloons to $1.1 million. If immigration reform increases the number of such households in the United States, it will allegedly cost U.S. taxpayers several billion dollars a year.

It is certainly true that low-skilled workers do, on average, consume more in government services than they pay in taxes, especially at the state and local levels. But some of the estimates of that cost have been grossly exaggerated. Moreover, the value of an immigrant to U.S. society should not be judged solely on his or her fiscal impact.

The wilder estimates of the fiscal impact of low-skilled immigrants are contradicted by more credible estimates. In May 2006, the Congressional Budget Office calculated that the 2006 Comprehensive Immigration Reform Act (S. 2611) then before the U.S. Senate would have a positive impact of $12 billion on the federal budget during the decade after passage.

The 2006 legislation, like current proposals, would have allowed low-skilled foreign-born workers to enter the United States through a temporary worker program, and it would have allowed several million undocumented workers in the United States to obtain legal status.

Specifically, the CBO estimated that federal spending would increase $53.6 billion during the period 2007-16 if the legislation became law — primarily because of increases in refundable tax credits and Medicaid spending.

The additional spending would be more than offset in the same period by an even greater increase in federal revenues of $65.7 billion, mostly due to higher collections of income and Social Security taxes but also because of increased visa fees.

Increased immigration has also been blamed for crowded roads, hospitals, public schools and prisons. In all four of those cases, the negative impact of immigration has been exaggerated.

As for congestion of roads, immigration has played a secondary role in population growth nationally and at a more local level. Nationally, net international migration accounts for 43% of U.S. annual population growth, with natural growth still accounting for a majority of the increase.

On a local level, an analysis of U.S. Census data shows that, for a typical U.S. county, net international migration accounted for 28% of population growth between 2000 and 2006. Natural growth from births over deaths accounted for 38% of growth on a county level and migration from other counties 34%.

One-third of U.S. counties actually lost population between 2000 and 2006 as birthrates continue to fall and as Americans migrate internally to the most economically dynamic metropolitan areas. If local roads seem more crowded, it is not typically immigration but natural growth and internal migration that are mostly responsible.

As for alleged overcrowding at public schools, low-skilled immigrants cannot be singled out for blame. Enrollment in the public school system has actually been declining relative to the size of the United States’ overall population.

The share of our population in K-12 public schools has fallen sharply in recent decades, from 22% of the U.S. population in 1970 to 16% today. As with roads, overcrowding in certain school districts is more likely to be driven by new births and internal migration than by newly arrived immigrants.

As for crime and the inmate population, again, immigration is not the major driver. Indeed, the violent crime rate in the United States has actually been trending down in recent years as immigration has been increasing.

After rising steadily from the 1960s through the early 1990s, the rate of violent crime in the United States dropped from 758 offenses per 100,000 population in 1991 to 469 offenses in 2005. As a recent study by the Immigration Policy Center concluded, “Even as the undocumented population has doubled since 1994, the violent crime rate in the United States has declined 34.2%, and the property crime rate has fallen 26.4%.”

In fact, immigrants are less likely to be jailed than are their native-born counterparts with similar education and ethnic backgrounds.

As for hospitals, especially emergency rooms, the presence of uninsured, low-skilled workers in a particular area does impose additional costs on hospitals in the form of uncompensated care.

There is no evidence, however, that illegal immigration is the principal cause of such costs nationwide. Indeed, low-skilled immigrants tend to underuse health care because they are typically young and relatively healthy.

A recent report from the Rand Corporation found that immigrants to the United States use relatively few health services. The report estimates that all levels of government in the United States spend $1.1 billion a year on health care for undocumented workers aged 18 to 64.

That compares to a total of $88 billion in government funds spent on health care for all adults in the same age group. In other words, while illegal immigrants account for about 5% of the workforce, they account for 1.2% of spending on public health care for all working-age Americans.

Although the fiscal impact of low-skilled immigrants has been exaggerated by opponents of reform, it can impose real burdens at a local level, particularly where immigration inflows are especially heavy.

A 1997 National Research Council study found that, although the fiscal impact of a typical immigrant and his or her descendants is strongly positive at the federal level, it is negative at the state and local levels.

However, state and local fiscal costs, while real, must be weighed against the equally real and positive effect of immigration on the overall economy.

Low-skilled immigrants allow important sectors of the U.S. economy, such as retail, cleaning, food preparation, construction and other services, to expand to meet the needs of their customers.

They help the economy produce a wider array of more affordably priced goods and services, raising the real wages of most Americans. By filling gaps in the U.S. labor market, such immigrants create investment opportunities and employment for native-born Americans.

Immigrants are also consumers, increasing demand for U.S.-made goods and services.